Liljander, Veronica

Roos, Inger

Karlstad University, Faculty of Economic Sciences, Communication and IT, Service Research Center. Karlstad University, Faculty of Economic Sciences, Communication and IT, Department of Business Administration.

2001 (English)Conference paper, Published paper (Refereed)

Abstract [en]

Relationship marketing (RM) is usually posited as the opposite of transactional marketing, which is marketing at arms-length without any interaction between producers and individual buyers. Its opposite RM has been seen as the revival of old customs, when buyers and producers were known to each other, and close buyer-seller relations were common practice (Grönroos 1990; Sheth and Parvatiyar 2000). Long-term relationships are believed to be beneficial to both the firm and its customers because it increases the companys productivity and profits (Reicheld 1996) while providing customers with individualised service, customised goods and other relationship benefits that follow from gaining more knowledgeable about customers needs (Berry 1995; Gwinner, Gremler and Bitner 1998).

Doubts have been raised regarding its applicability for all types of consumer products (Crosby and Stephens 1987; Grönroos 1990), and its desirability by all customers (Berry 1995; Grönroos 2000; Fournier et al. 1998), but it is believed to be specifically well suited for services marketing because of the direct interaction between customers and service providers (Berry 1995; Grönroos 2000). Companies may also need to implement both transaction and RM strategies for different customer segments (Berry 1995).

RM strategies can vary considerably between services industries and companies, and little is known about which relationship levels lead to positive customer responses and enhance company profitability. Sheaves and Barnes (1996, p 216) note that Many companies have embraced this [RM] concept and have set out to establish customer relationships. Yet, there appears to be little consensus on what it actually means to have a relationship with a customer or how the concept should be implemented. Companies implement it on different levels and separate strategies may be used within the same firm for different customer segments, such as key accounts (Cannon and Narayandas 2000). Berry and Parasuraman (1991) divided RM into three levels, depending on the bonds which are created between the firm and its customers. The lowest level, which is based on financial bonds, offers little competitive advantage to the firm. Parvatyiar and Sheth (2000) also note that RM has been interpreted both narrowly as the implementation of loyalty programs and data base marketing, and more broadly as including information sharing and joint development of goods and services that are in the customers best interest.

However, customers of different services desire different forms of relationships (Sheaves and Barnes 1996). For instance, highly involved customers of services with credence properties (Sheth and Parvatiyar 1995; Sharma and Patterson 1999) may be especially inclined to form close long-term relationships with one service provider. Hence, RM has to be looked upon as a continuum, with various possible implementations. It is essential to identify different types of customer relationships and investigate their effect on company profitability, customer satisfaction and commitment. By taking a customer perspective, we propose that customer relationships can be described along a continuum ranging from spurious to true relationships, depending on the customers level of satisfaction, trust and commitment.

Trust and commitment are central in business relationships (Morgan and Hunt 1994), but they are also crucial for understanding customer service relationships (Garbarino and Johnson 1999; Sharma and Patterson 1999; Singh and Sirdeshmukh 2000; Tax et al 1998). Relationships foster trust (Gwinner et al. 1998; Sheth and Parvatiyar 2000), but also cannot develop without a build up of trust between the parties (Berry 1995, Sheaves and Barnes 1996). Trus is especially important for services that are characterised by high performance ambiguity, significant consequentiality and high interdependence between the parties, such as medical service and car repair (Singh and Sirdeshmukh 2000). The intangibility and heterogeneousness of services, combined with a spread of consumer distrust in companies, positions trust as perhaps the single most powerful relationship marketing tool available to the company (Berry 1995, p. 242). This sentiment is echoed by Hart and Johnson (1999), who advocate the absence of trust defects as the most important factor in explaining customer commitment to service companies.

Trust in services is built by continuously experiencing high process and outcome quality (Sharma and Patterson 1999), as well as by frequent and open, two-way communication between the parties (Berry 1995; Sharma and Patterson 1999). The importance of communication for relationship strength has been stressed in industrial buyer-seller relationships (Morgan and Hunt 1994) while it has been largely ignored as a value-adding component in RM (Crosby and Stephens 1987).

In this paper we look at RM from the customers point of view. The purpose of the paper is to show that customer relationships may exist at different levels, ranging from spurious to true relationships. We do this with a literature review that emphasises trust and commitment. Empirical research is needed to identify relationship levels for different services and customer groups and to evaluate the success of RM strategies. However, the present paper is limited to a preliminary theoretical framework for conducting future research.

First, a distinction is made between two extreme relationship levels, spurious and true relationships. Next, customer commitment and trust will be discussed in some detail, while service satisfaction and communication effectiveness will be given less attention. Last, relationship levels will be related to levels of trust and commitment.